Exhibit 2.3
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of June 2, 1998 (the
"Agreement"), between Tellabs, Inc., a Delaware corporation ("Parent"),
and CIENA Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of
this Agreement, Parent, White Oak Merger Corp., a newly formed Delaware
corporation and a direct wholly owned subsidiary of Parent ("Sub"), and
the Company are entering into an Agreement and Plan of Merger, dated as
of the date hereof (the "Merger Agreement"), which provides for the
merger of Sub with and into the Company;
WHEREAS, as a condition to Parent's willingness to enter into
the Merger Agreement, Parent has requested that the Company grant to
Parent an option to purchase up to 20,200,000 authorized and unissued
shares of Company Common Stock, upon the terms and subject to the
conditions hereof; and
WHEREAS, in order to induce Parent to enter into the Merger
Agreement, the Company has agreed to grant Parent the requested option.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties hereto
agree as follows:
1. The Option; Exercise; Adjustments. The Company hereby
grants to Parent an irrevocable option (the "Option") to purchase from
time to time up to 20,200,000 authorized and unissued shares of common
stock, par value $.01 per share, of the Company (the "Company Common
Stock"), upon the terms and subject to the conditions set forth herein
(the "Optioned Shares"). Subject to the conditions set forth in Section
2(a), the Option may be exercised by Parent in whole or from time to
time in part, at any time after the date hereof and prior to the
termination of the Option in accordance with Section 19. In the event
Parent wishes to exercise the Option, Parent shall send a written notice
to the Company (the "Stock Exercise Notice") specifying the total number
of Optioned Shares it wishes to purchase and a date (not later than 20
business days and not earlier than two business days from the date such
notice is given) for the closing of such purchase (the "Closing Date").
Parent may revoke an exercise of the Option at any time prior to the
Closing Date by written notice to the Company. In the event of any
change in Company Common Stock by reason of any stock dividend, stock
split, split-up, recapitalization, merger or other change in the
corporate or capital structure of the Company, the number and type of
Optioned Shares subject to the Option and the Exercise Price (as
hereinafter defined) per Optioned Share shall be appropriately adjusted.
In the event that any additional shares of Company Common Stock are
issued after the date of this Agreement (other than pursuant to an event
described in the preceding sentence or pursuant to this Agreement), the
number of Optioned Shares subject to the Option shall be adjusted so
that, after such issuance, it equals (but does not exceed) 19.9% of the
number of shares of Company Common Stock then issued and outstanding and
19.9% of the voting power of shares of capital stock of the Company then
issued and outstanding, after reduction, to the extent necessary to
comply with the exception to the shareholder approval requirements of
NASDAQ (as hereinafter defined), for any shares issued pursuant to the
Option.
2. Conditions to Exercise of Option and Delivery of Optioned
Shares. (a) Parent's right to exercise the Option is subject to the
following conditions:
(i) Neither Parent nor Sub shall have breached any of its
material obligations under the Merger Agreement;
(ii) No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the
United States invalidating the grant or prohibiting the exercise of the
Option shall be in effect;
(iii) A Third Party Acquisition Event shall have occurred or
the Company shall have entered into a letter of intent, agreement in
principle, acquisition agreement or other similar agreement with respect
to a Third Party Acquisition Event; and
(iv) This Agreement and the Option shall not have terminated
pursuant to Section 19 hereof.
(b) Parent's obligation to purchase the Optioned Shares
following the exercise of the Option, and the Company's obligation to
deliver the Optioned Shares, are subject to the following conditions:
(i) No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the
United States prohibiting the delivery of the Optioned Shares shall be
in effect;
(ii) The purchase of the Optioned Shares will not violate Rule
10b-13 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"); and
(iii) All applicable waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), shall have expired or been terminated.
3. Exercise Price for Optioned Shares. At any Closing Date,
the Company will deliver to Parent a certificate or certificates
representing the Optioned Shares in the denominations designated by
Parent in its Stock Exercise Notice and Parent will purchase the
Optioned Shares from the Company at a price per Optioned Share equal to
$65.875 (the "Exercise Price"), payable in common stock, par value $.01
per share, of Parent (the "Parent Common Stock"), cash or a combination
of Parent Common Stock or cash, in each case at Parent's option, as
specified in the Stock Exercise Notice. Any cash payment made by Parent
to the Company pursuant to this Agreement shall be made by wire transfer
of federal funds to a bank designated by the Company or a check payable
in immediately available funds. If Parent elects to pay the Exercise
Price or a portion thereof in Parent Common Stock, the Parent Common
Stock shall be valued at the average of the last reported sales prices
of the Parent Common Stock on The Nasdaq Stock Market ("NASDAQ") for the
five trading days immediately prior to the date of the Stock Exercise
Notice. After payment of the Exercise Price for the Optioned Shares
covered by the Stock Exercise Notice, the Option shall be deemed
exercised to the extent of the Optioned Shares specified in the Stock
Exercise Notice as of the date such Stock Exercise Notice is given to
the Company. Notwithstanding anything to the contrary herein, the
Exercise Price shall from time to time be adjusted so that in no event
shall the Aggregate Spread Value, together with the Termination Fee,
exceed $200,000,000 (it being understood that, if the Exercise Price has
been increased from time to time as a result of this sentence, the
Exercise Price shall from time to time be adjusted downward to the
extent of any decrease in the price of the Company Common Stock).
"Spread Value" with respect to an Optioned Share means the excess, if
any, of (i) the average of the last reported sales prices on NASDAQ of
the Company Common Stock during the five trading days immediately
preceding the written notice of exercise (in the case of an Optioned
Share previously exercised) or the date of determination (in the case of
an Optioned Share as to which the Option has not yet been exercised)
over (ii) the Exercise Price. The Aggregate Spread Value shall be the
sum of the Spread Values of all Optioned Shares.
4. Representations and Warranties of the Company. The
Company represents and warrants to Parent that (a) the execution and
delivery of this Agreement by the Company and the consummation by it of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and this Agreement
has been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms; (b) the Company has taken all
necessary corporate action to authorize and reserve the Optioned Shares
for issuance upon exercise of the Option, and the Optioned Shares, when
issued and delivered by the Company to Parent upon exercise of the
Option, will be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights; (c) except as otherwise
required by the HSR Act, except for routine filings and subject to
Section 7, the execution and delivery of this Agreement by the Company
and the consummation by it of the transactions contemplated hereby do
not require the consent, approval or authorization of, or filing with,
any person or public authority and will not violate or conflict with the
Company's Third Restated Certificate of Incorporation, as amended, or
Amended and Restated By-Laws, or result in the acceleration or
termination of, or constitute a default under, any indenture, license,
approval, agreement, understanding or other instrument, or any statute,
rule, regulation, judgment, order or other restriction binding upon or
applicable to the Company or any of its subsidiaries or any of their
respective properties or assets; (d) the Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby; and (e) the Company has taken all appropriate
actions so that the restrictions on business combinations contained in
Section 203 of the General Corporation Law of the State of Delaware, as
amended, will not apply with respect to or as a result of the
transactions contemplated hereby.
5. Representations and Warranties of Parent. Parent
represents and warrants to the Company that (a) the execution and
delivery of this Agreement by Parent and the consummation by it of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and this Agreement has
been duly executed and delivered by Parent and constitutes a valid and
binding agreement of Parent; and (b) Parent is acquiring the Option and,
if and when it exercises the Option, will be acquiring the Optioned
Shares issuable upon the exercise thereof for its own account and not
with a view to distribution or resale in any manner which would be in
violation of the Securities Act of 1933, as amended (the "Securities
Act"), and will not sell or otherwise dispose of the Optioned Shares
except pursuant to an effective registration statement under the
Securities Act or a valid exemption from registration under the
Securities Act.
6. The Closing. Any closing hereunder shall take place on
the Closing Date specified by Parent in its Stock Exercise Notice
pursuant to Section 1 at 10:00 A.M., local time, or the first business
day thereafter on which all of the conditions in Section 2(b) are met,
at the principal executive office of the Company, or at such other time
and place as the parties hereto may agree.
7. Filings Related to Optioned Shares. The Company will
make such filings with the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. as are required by the
Exchange Act in connection with the execution and delivery of this
Agreement and the exercise of the Option, and will use its best efforts
to effect all necessary filings by the Company under the HSR Act and to
have the Optioned Shares approved for quotation on NASDAQ.
8. Registration Rights. (a) If the Company effects any
registration or registrations of shares of Company Common Stock under
the Securities Act for its own account or for any other stockholder of
the Company at any time after the exercise of the Option (other than a
registration on Form X-0, Xxxx X-0 or any successor forms), it will
allow Parent to participate in such registration or registrations with
respect to any or all of the Optioned Shares acquired upon the exercise
of the Option, subject to any existing priority registration rights
granted to existing holders of Company Common Stock; provided, however,
that if the managing underwriters in such offering advise the Company
that, in their written opinion, the number of Optioned Shares requested
by Parent to be included in such registration exceeds the number of
shares of Company Common Stock which can be sold in such offering, the
Company may exclude from such registration all or a portion, as may be
appropriate, of the Optioned Shares requested for inclusion by Parent.
(b) At any time after the exercise of the Option, upon the
request of Parent, the Company will promptly file and use its best
efforts to cause to be declared effective a registration statement under
the Securities Act (and applicable Blue Sky statutes) with respect to
any or all of the Optioned Shares acquired upon the exercise of the
Option; provided, however, that the Company shall not be required to
have declared effective more than three registration statements
hereunder and shall be entitled to delay the effectiveness of each such
registration statement, for a period not to exceed 90 days in the
aggregate, if the commencement of such offering would, in the reasonable
good faith judgment of the Board of Directors of the Company, require
premature disclosure of any material corporate development or otherwise
materially interfere with or materially adversely affect any pending or
proposed offering of securities of the Company. In connection with any
such registration requested by Parent, the costs of such registration
shall be borne by the Company; provided, however, that if Parent is
eligible to sell the Optioned Shares under Rule 144(k) of the Securities
Act, Parent shall pay the costs of such registration. The Company and
Parent each shall provide the other and any underwriters with customary
indemnification and contribution agreements.
9. Optional Put. Prior to the termination of the Option
in accordance with Section 19, if any event set forth in Section
2(a)(iii) has occurred and the other conditions set forth in Section
2(a) are met, Parent shall have the right, upon three business days'
prior written notice to the Company, to require the Company to purchase
the Option from Parent (the "Put Right") at a cash purchase price (the
"Put Price") equal to the product determined by multiplying (A) the
number of Optioned Shares as to which the Option has not yet been
exercised by (B) the Spread (as defined below). As used herein, the
term "Spread" shall mean the excess, if any, of (i) the greater of (x)
the highest price (in cash or fair market value of securities or other
property) per share of Company Common Stock paid or to be paid within 12
months preceding the date of exercise of the Put Right for any shares of
Company Common Stock beneficially owned by any Person who shall have
acquired or become the beneficial owner of 20% or more of the
outstanding shares of Company Common Stock after the date hereof or (y)
the average of the last reported sales prices on NASDAQ of the Company
Common Stock during the five trading days immediately preceding the
written notice of exercise of the Put Right over (ii) the Exercise
Price. Notwithstanding anything herein to the contrary, in no event
shall the aggregate Put Price, together with the Aggregate Spread Value
of any Optioned Shares previously exercised and the amount of the
Termination Fee then payable or previously paid, exceed $200,000,000.
10. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise provided
in Section 8 or as specified in the Merger Agreement.
11. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state thereof
having jurisdiction, this being in addition to any other remedy to which
they are entitled at law or in equity.
12. Notice. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given and
made if in writing and if served by personal delivery upon the party for
whom it is intended or if sent by telex or telecopier (and also
confirmed in writing) to the person at the address set forth below, or
such other address as may be designated in writing hereafter, in the
same manner, by such person:
(a) if to Parent, to
Tellabs, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Xxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to the Company, to
CIENA Corporation
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxx L.L.P.
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Silver, Esq.
Facsimile No.: (000) 000-0000
13. Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties named herein and their
respective successors and assigns. Nothing in this Agreement, expressed
or implied, is intended to confer upon any Person other than Parent or
the Company, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
14. Entire Agreement; Amendments. This Agreement, together
with the Merger Agreement and the other documents referred to therein,
contains the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior and contemporaneous
agreements and understandings, oral or written, with respect to such
transactions. This Agreement may not be changed, amended or modified
orally, but only by an agreement in writing signed by the party against
whom any waiver, change, amendment, modification or discharge may be
sought. Capitalized terms not otherwise defined in this Agreement shall
have the meanings set forth in the Merger Agreement.
15. Assignment. No party to this Agreement may assign any of
its rights or delegate any of its obligations under this Agreement
(whether by operation of law or otherwise) without the prior written
consent of the other party hereto, except that Parent may, without a
written consent, assign its rights and delegate its obligations
hereunder in whole or in part to one or more of its direct or indirect
wholly owned subsidiaries, but no such assignment shall relieve Parent
of its obligations hereunder.
16. Headings. The section headings herein are for convenienc
only and shall not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflicts of laws thereof.
19. Termination. This Agreement and the Option shall
terminate upon the earlier of (i) the Effective Time and (ii) the
termination of the Merger Agreement in accordance with its terms;
provided, however, that (w) in the case of a termination of the Merger
Agreement by Parent or the Company pursuant to Section 7.1(e) thereof
(if a Takeover Proposal existed between the date hereof and the date of
the Company Stockholder Meeting), this Agreement and the Option shall
terminate on the first anniversary of such termination of the Merger
Agreement, (x) in the case of a termination by Parent or the Company
pursuant to Section 7.1(g) of the Merger Agreement, this Agreement and
the Option shall terminate on the earlier of the first anniversary of
such termination of the Merger Agreement or the date of consummation of
the Superior Proposal contemplated thereby, (y) in the case of a
termination by Parent pursuant to Section 7.1(h)(i) of the Merger
Agreement in connection with which no Termination Fee is payable
pursuant to Section 5.7(d) thereof, this Agreement and the Option shall
terminate upon such termination of the Merger Agreement and (z) in the
case of a termination by Parent pursuant to Sections 7.1(h)(i) (except
as provided in clause (y) above), (ii), (iii) or (iv) of the Merger
Agreement, this Agreement and the Option shall terminate on the first
anniversary of such termination.
20. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule
of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as
the economic and legal substance of the transactions contemplated hereby
are not affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be
consummated as originally contemplated to the fullest extent possible.
IN WITNESS WHEREOF, Parent and the Company have caused this
Agreement to be duly executed and delivered on the day and year first
above written.
TELLABS, INC.
By: /s/ Xxxxxxx X. Birck________
Name: Xxxxxxx X. Xxxxx
Title: President and
Chief Executive Officer
CIENA CORPORATION
By: /s/ Xxxxxxx X. Nettles______
Name: Xxxxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
